1637.HK WACC - Weighted Average Cost of Capital

The WACC of SH Group (Holdings) Ltd (1637.HK) is 18.4%.

The Cost of Equity of SH Group (Holdings) Ltd (1637.HK) is 6.05%.

The Cost of Debt of SH Group (Holdings) Ltd (1637.HK) is 48.30%.

	Range	Selected
Cost of equity	5.10% - 7.00%	6.05%
Tax rate	16.40% - 19.40%	17.90%
Cost of debt	7.00% - 89.60%	48.30%
WACC	5.4% - 31.4%	18.4%

WACC

1637.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.38	0.45

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	7.00%

Tax rate	16.40%	19.40%
Debt/Equity ratio	0.6	0.6
Cost of debt	7.00%	89.60%

After-tax WACC	5.4%	31.4%


Selected WACC	18.4%

1637.HK's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for 1637.HK:

cost_of_equity (6.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.38) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.